Key performance indicators (KPIs) form a vital part of the information required to determine and explain how a law firm can manage its organisational health. And whether you love them or hate them, they’re the backbone of your legal business. KPIs for every business are different, but here are the top 5 most important KPIs your law firm should be tracking when you’re wanting to know the true health and performance of your operations.
1. Productivity KPIs
Managing a productive law firm should be your first aim, and your main focus. But frustratingly many legal professionals don’t accurately or efficiently track their billable hours or use process automation and matter management tools. When it comes to your productivity KPIs, assess: the ratio of billed hours to non-billable hours worked. In addition to the number of unbilled days and the fee earner’s utilization rate (defined as the number of billable hours worked divided by the number of hours in the workday).
Lateral Technology’s intuitive time recording system works to reduce administrative workloads through its user friendly interface. And fee earners never miss a billable minute, since Lateral automatically records all fee earners’ work within the browser system. Furthermore, the features of Lateral’s KPI monitoring functionality include a fee earner management report, which details any fees which have been delivered. This can be broken down by fee earner, or grouped by department.
2. Client Satisfaction
Understanding data relating to client satisfaction is incredibly important. Listening to your clients, and modifying and improving your practices is key. Look at the number of client referrals your business has enjoyed, as well as the client satisfaction scores. Also client retention rates will indicate their impression of your service. Leading legal case management software boasts flexible client self-service portal systems, enabling clients to login in order to view all history, actions and activity on their case in a digital format, as well as being able to leave feedback. And this tool can have a huge impact on your customer service.
3. Financial KPIs
Accurately assessing financial KPIs is important to the long term health of your legal firm. If you want to develop a profitable enterprise focus on: revenue collected per month, the amount of firm debt and your realisation rate (the amount billed as a proportion of number of billable hours that have been worked). Of course these financial figures will show you how well you’re doing when it comes to generating revenue and profits.
4. Marketing KPIs
Marketing key performance indicators are the metrics that determine whether or not a marketing strategy is helping your law firm achieve its business goals. Consider adoption of the following marketing KPIs: website traffic, marketing budget ratio (the ratio of the marketing spend to the total fees billed), and the number of marketing actions you have carried out as an organisation per month, or per quarter.
5. Profitability By Client
If you can accurately get to grips with your profitability by client KPIs you’re going to know which clients are the most profitable, and which ones cost you more. This KPI can be exported as an automated report via legal case management software tools, and is calculated by the following equation: subtract estimated cost per fee earner per hour working for said client from fees generated by said client.
Lateral Technology’s legal case management system provides over 100 standard “out-of-the-box” reports, measuring any required KPIs. If you need a new approach to running your legal operations, get in touch with Lateral today, and learn how our software can give you the stronges competitive advantage.